U.S. Federal Government Shutdown: Daily Update #7

The Elevator Speech Overview
Wednesday is day nine of the Government Shutdown. Eight days until the Treasury says the U.S. will hit its debt ceiling. Democratic and Republican House leaders met today in a private meeting and President Obama announced he will be holding a series of meetings with Congress at the White House this week. The President met with House Democrats on Wednesday for the first of the series. However, Republicans announced they would willing to send 18 Members to meet with the President.

U.S. House of Representatives
On Wednesday, Minority Leader Nancy Pelosi (D-CA) and Minority Whip Steny Hoyer (D-MD) met with Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) in a private meeting. No negotiations occurred. Neither side appeared to change stance based upon the meeting.

Meanwhile, a memo from Moody’s Investors Service, an investment rating agency, was circulating among House Republicans that downplayed the consequences of Congress failing to pass a debt ceiling increase prior to the October 17 deadline. According to the memo, government expenditures will be limited to the amount of incoming revenue and it will not result in a technical default on debt. Rather, the memo maintains, a failure to increase the debt authority would mean that the government would need to prioritize WHICH obligations it must pay first and which obligations it would need to forgo, at least in the short term, until a solution were found OR the government were compelled to pay the obligations by the courts. The underlying assumption of the Moody’s report is that the Treasury would elect to pay bond debt and therefore not “default” on those debts (assuming there would be enough cash flow into the government to pay these maturing bond obligations). But, instead of failing to pay bonds, the Treasury would instead choose to forgo making other obligated payments like Social Security, Medicare, Medicaid, etc. This theory would be heavily tested around the First of November when the federal government must make nearly $60 billion in payments within a couple of days as Social Security and other payments are typically sent out.

Of course, the Moody’s memo assumes that at some point revenues will increase enough to pay both the past obligations that had been foregone as well as current obligations coming due. This would be the equivalent of the federal government deciding that it will pay the mortgage first, but not pay the phone bill or the car insurance and hope that the income next month is enough to cover everything, including last month’s missed payments.

Several Republicans, such as Rep. King from Iowa, have also become very vocal in their public statements that they do not believe a default of U.S. Treasury Bonds would be as bad as many are claiming; other members of the GOP remain concerned.

House Democrats began sending out letters to the twenty-two Republicans that have publicly expressed support for a clean continuing resolution (CR), pressing them to sign the discharge petition that would bring the clean CR to the floor for a vote. Many believe that if Speaker John Boehner allowed a vote to be held, enough Republicans will join with Democrats to pass the measure and reopen the government. Speaker Boehner continues to assert that the clean CR does not have sufficient support to pass. On Wednesday, the House also voted on and passed another targeted CR, this time focused on the Federal Aviation Administration (FAA), and a measure that would ensure that the Pentagon is able to pay death gratuities and survivor benefits to the families of fallen military members. The Senate is expected to continue its boycott of the House’s piecemeal funding approach and ignore both measures.

During Wednesday’s private Republican Study Committee meeting, House Budget Chairman Paul Ryan (R-WI) put forth a proposal that would provide for a six-week debt limit increase but require both the House and the Senate to agree on undertaking both tax and entitlement reform. The plan would require Congress to pass legislation to reform both within the six weeks, as well as agree to a long-term increase to the debt ceiling. Additionally, it would require dollar-for-dollar budget cuts with the initial $118 billion debt limit increase. The plan would also have an enforcing mechanism, possibly as was used in the Budget Control Act that resulted in the budget cuts known as sequestration. The release of Chairman Ryan’s proposal comes in advance of House Republicans meeting with President Obama, which is scheduled for Thursday. President Obama announced in a press conference on Tuesday that he is open to a clean short-term debt ceiling increase. It is unclear if the Ryan proposal passes the President’s definition of a “clean” increase because it does contain some obligations.

U.S. Senate
With the introduction of Senate Majority Leader Harry Reid’s (D-NV) clean debt ceiling bill on Tuesday, attention has turned to the probability of Democrats being able to recruit the six Republican votes they would need to overcome a filibuster and pass the bill. The odds are low so far, as only one Republican, Senator Mark Kirk (R-IL), publicly saying he would vote for it while other Republicans appear unified in opposing the bill. The situation has spurred yet another discussion of the “nuclear option,” a highly controversial action in which Majority Leader Reid would eliminate the option of a filibuster. He would accomplish this through the use of an obscure procedural work-around that would only require 51 votes to change the rules, rather than the usual threshold of 67 votes to change the rules as required by regular order. Although Majority Leader Reid has threatened to use the nuclear option to overcome Republican opposition twice already this year, it was always averted through bipartisan compromise. The filibuster is a powerful tool of the minority party to halt legislation and thus disrupt the majority party’s agenda; the power of the filibuster is an important differentiator of the Senate and the House, where the majority party rules. Many Senators and observers worry about the precedent this would set for future Senates and legislative governance in general.

Senator Susan Collins (R-ME), a moderate Republican, sparked some hope for bipartisan compromise on Wednesday as she began circulating her own proposal to end the government shutdown. Her proposal includes a repeal of the medical device tax and would offer federal agencies more flexibility in dealing with the budget cuts imposed by the sequester. It does not yet include a way to deal with the debt ceiling but Democratic Senators have indicated that they would like to see a debt ceiling component added. At least two other key Republican Senators have endorsed her plan and Democrats have hinted that they might be willing to negotiate over the proposal. As with Majority Leader Reid’s bill on the debt ceiling, however, her proposal has a tough road ahead.

The White House
President Obama announced Wednesday that he would be holding a series of meetings at the White House this week with Members of Congress. Scheduled for Wednesday afternoon, the meeting with House Democrats was the first to take place. DC Delegate Eleanor Holmes Norton (D-DC) expressed displeasure over the shutdown’s impact on the District of Colombia. On Thursday, the President’s second meeting of the series is to be held with House Republicans. In response to the President’s invitation, the Republicans announced they will send “a smaller group of negotiators,” rather than the whole caucus. The group of eighteen will include elected members of leadership and key committee chairman. The White House expressed disappointment that the entire conference of House Republicans will not attend.

The White House, however, continued with other government business and President Obama announced the nomination of Federal Reserve Board Vice Chairwoman Janet Yellen as his choice to replace retiring Chairman Ben Bernanke. Yellen’s nomination was greeted favorably by Wall Street with two of the three indices yielding a small gain for the day. Yellen was the president’s second choice for the post, after former U.S. Treasury Secretary and former Harvard President Lawrence Summers withdrew his name fro consideration. Summers had been strongly opposed by Senators from both parties over strong concerns over temperament.

Agency Spotlight: Department of Homeland Security
The Department of Homeland Security (DHS) is responsible for issues spanning aviation and border security, cybersecurity, chemical facility inspectors, and emergency response. Partially shut down due to the lapse in appropriations, the DHS has been able to maintain roughly 86% of its federal employees (known in the DHS as “exempted” employees rather than “excepted” as at other federal agencies) whose work is essential to the safety of life, property or national security. DHS programs that will be affected by the shutdown include: all of the Federal Emergency Management Agency’s (FEMA) non-disaster related grant programs; the E-Verify system; and the issuance or renewal of seaman documentation and licensing. DHS will also not be able to enter into any new contracts while the hiatus in funding continues. For selected components, the percentage of personnel reporting to work during the shutdown is as follows: Transportation Security Administration (TSA) – 93%; FEMA – 78%; U.S. Coast Guard (USCG) – 88%; Customs Border Protection (CBP) – 88%; Immigration and Customs Enforcement (ICE) – 80%; U.S. Citizen and Immigration Services (USCIS) – 97%; and Secret Service - 92%.

Public Opinion
On a lighter note, results from a Public Policy Polling (PPP) poll show that Congress has a ways to go before it gets back in Americans’ good graces. PPP was recognized as one of the most accurate polling organizations throughout the 2012 elections. Leading up to the Halloween holiday, Witches and Zombies appear to have higher approval ratings than the United States Congress.

What do you have a higher opinion of: Congress or Wall Street?

15% Congress

46% Wall Street

What do you have a higher opinion of: Congress or the IRS?

33% Congress

42% IRS

What do you have a higher opinion of: Congress or witches?

32% Congress

46% Witches

What do you have a higher opinion of: Congress or jury duty?

18% Congress

73% Jury duty

What do you have a higher opinion of: Congress or Lindsey Lohan?

40% Congress

36% Lindsey Lohan

Other things that participants had a higher opinion of than Congress:

Hemorroids, Zombies, Potholes, and the DMV.

In good news for Members of Congress, participants preferred Congress to:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

- hide

Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.